How to 10X Your Return in 12 Months

I am an income investor first. 

But I’m not above speculating.

I’ll carve out a thin slice of my portfolio to speculate.

Call it a side hustle.

I have found myself speculating more with leveraged ETFs in recent years. 

Leveraged ETFs are exchange-traded funds (ETFs) that use financial derivatives and debt to magnify the returns of an underlying index.

While a traditional ETF typically tracks the underlying securities on a 1:1 ratio, a leveraged ETF will track with 2:1 or a 3:1 ratio.

The underlying index rises 1%, the corresponding leveraged ETF will rise 2% or 3%. 

You’ll find 2x and 3x leveraged ETsF for the three major stock-market barometers. 

SPDR Dow Jones Industrial Average ETF Trust (NYSEArca: DIA)

  • (2x) ProShares Ultra Dow30 (NYSEArca: DDM)
  • (3x) ProShares Ultra Dow30 (NYSEArca: UDOW)

SPDR S&P 500 ETF Trust (NYSEArca: SPY)

  • (2x) ProShares Ultra S&P 500 (NYSEArca: SSO)
  • (3x) ProShares UltraPro S&P 500 (NYSEArca: UPRO)

Invesco QQQ Trust (NASDAQ:QQQ) (The NASDAQ 100)

  • (2x) ProShares Ultra QQQ (NYSEArca: QLD)
  • (3x) ProShares UltraPro QQQ (NYSEArca: TQQQ)

I prefer to focus on sector ETFs and their leveraged counterparts.

If I’m speculating, I’ll go all-in. I’ll speculate with the 3x leveraged ETFs.

Here are my go-to sector sector ETFs and their corresponding 3x leveraged counterparts.

SPDR S&P Biotech ETF (NYSEArca: XBI)

  • Direxion Daily S&P Biotech Bull 3X Shares (NYSEArca: LABU)

First Trust Dow Jones Internet Index Fund (NYSEArca: FDN)

  • Direxion Daily Dow Jones Internet Bull 3X Shares (NYSEArca: WEBL)

iShares Semiconductor ETF (NASDAQ: SOXX)

  • Direxion Daily Semiconductor Bull 3X Shares (NYSEArca: SOXL)

iShares U.S. Home Construction ETF (BATS: ITB)

  • Direxion Daily Homebuilders & Supplies Bull 3X Shares (NYSEArca: NAIL)


  • Direxion Daily Retail Bull 3X Shares (NYSEArca: RETL)

Leveraged ETFs are contrarian speculations first and always. The last thing they are is a momentum trade or a long-term investment.

I adhere to a couple self-imposed rules:

I’ll consider a 2x or 3x leveraged speculation on the broad-based market indexes – the SPY, DIA, or QQQ – only if the index is down 20% or more from a previous high. 

I am even more discount demanding with the sector ETFs. 

I’ll consider a 3x leveraged speculation only if the underlying index is down 40% or more. 

Unfortunately, that means most leveraged ETFs speculations today are off limits. 

Most, but not all.

The SPDR S&P Biotech ETF (XBI) trades at a 45% discount to its previous high.

The Direxion Daily S&P Biotech Bull 3X ETF (LABU) is the corresponding leveraged ETF. Its shares trade at an all-time low. 

The last time the Direxion Daily S&P Biotech Bull 3X ETF traded at all-time high, the share recovered 10x (more than) over the next 12 months. 

Not for Everyone

The ability to endure volatility is essential. Daily price movements of 15% – up or down – are not uncommon.

If you are unable to operate on an even keel, 3x ETFs aren’t for you. 

I cannot stress enough that 3x ETF speculation is a side hustle. I would allocate no more than 5% of my portfolio to a leveraged investment.

The Principal Objection

It’s volatility decay.

Volatility decay refers to the value lost through price volatility that occurs when the share price is either flat lining or trending lower.

If the share price is up 5% one day and then down 5% the next, and continually alternates as such, the share price will approach zero. (The sponsors will reverse split the shares to keep them listed.)

So, yes, volatility decay is a legitimate concern.

With those caveats out of the way, I still like the Direxion Daily S&P Biotech Bull 3X Shares ETF’s speculative proposition today.

I think the opportunity to earn 10x over the next 12-to-24 months is legitimate.

The price chart above suggests such a price movement is within the realm of possibilities.

Good Fortunes

Steve Mauzy

(Disclosure: I own LABU shares.)

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